5 Tips to Ignite Your Business

As we step into the new year, we anticipate a significant uptick in individuals eager to launch or seriously develop their businesses. I've always maintained that fostering successful Black-owned businesses is crucial for achieving economic justice and shrinking the racial wealth gap. Yet, success in business requires navigating through a plethora of often conflicting and confusing information. To aid in demystifying this process and make business success more accessible to those ready to commit, here are five straightforward tips to either kick-start your business or assist someone in igniting theirs.

First, do the boring stuff: file for your LLC, open a business bank account, and set up a robust bookkeeping system. These back-office functions are essential in establishing a solid foundation for your business. Neglecting these aspects can severely limit your growth potential, as proper paperwork and financial management are critical for attracting investors and understanding what is working for your business and what isn’t.

Second, understand your offering. Understand the unique benefit your product or service offers and the problem it solves for customers. Consider what sets you apart from others addressing similar needs, your credibility in the market, the opportunity you’re seizing, and how you plan to execute from concept to delivery. Comprehensive planning on these fronts is vital for transitioning your product from an idea to the customer’s hands.

Third, gather social proof early. It’s easy to get caught up in product development and overlook the importance of market feedback. Test your product with early adopters, gauge their responses, and adjust accordingly. Establishing a robust digital presence and understanding your target market are crucial. Remember, your business’s traction is as critical as the product itself. From an investor's perspective, the proof of your business's value is not just in what you believe or the data you present, but in what customers think and their willingness to pay for your offering.

Fourth, develop a clear funding strategy. There are only 3 ways to fund a business.

1. The most thought of way is debt. This can look like a personal loan, business loan, credit cards, private loans or anything of that sort.

2. Equity is another way to fund a business. You can put in your own money and start completely through owners’ equity. There’s also friends and family, private investors, business grants, and crowd funding platforms like WeFunder.

3. The third way is straight sales. If you can begin generating revenue for your core business, that revenue becomes the prime funding source for most businesses.  If you are prelaunch then you might be able to use crowdfunding platforms like Kickstarter or IndieGoGo to generate presales.

Whether it’s debt, equity, or net revenue you need to have a solid understanding of how you will get the initial capital needed to really accelerate the business. This also means that you need to have already done enough planning to have a clear understating of your startup costs and budget.

Fifth, plan your financial management. You need to have an understanding of your expenses and your profit margin, then you can plan for how you will reinvest the profit. The base part of your revenue will cover the expenses associated with the sale, but the profit can be used to increase marketing, increase inventory, increase production space, or whatever else you need to invest in for growth. The key is that you invest the profit into things that contribute to the increase of the business’ revenue. This means you won’t pay yourself for a while until you reach a financial milestone where you can afford to add payroll to your expense bucket. This reinvestment is critical for boosting your business's revenue in the long-term.

These five tips will guide you towards establishing a resilient and successful business. If you’re in a position to support an entrepreneur, consider these three impactful actions:

1. Funding: If you donate to that business, you have given them an equity investment without the expectation of a return, that is always helpful. You can also be a customer of that business, helping them fund the business by contributing to the profit.

2. Feedback: Offer valuable feedback as an early-stage customer would, helping to refine and strengthen their business offering.

3. Amplify: Knowing how important social proof is, you can be extremely helpful by taking steps to introduce new people to the business. Not only does it help the business with social proof, but it also helps by increasing the number of customers, obviously resulting in an increase in profit.

I hope you find these tips useful. Remember, Kansas City G.I.F.T. is always here to provide free business coaching, whether in person or virtually. Don’t hesitate to book a session or reach out with any questions. Let’s make this year a transformative one for your business endeavors!